Correlation Between Hisense Home and Evolent Health

Can any of the company-specific risk be diversified away by investing in both Hisense Home and Evolent Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hisense Home and Evolent Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hisense Home Appliances and Evolent Health, you can compare the effects of market volatilities on Hisense Home and Evolent Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hisense Home with a short position of Evolent Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisense Home and Evolent Health.

Diversification Opportunities for Hisense Home and Evolent Health

0.0

Correlation Coefficient

Hisense Home  Evolent Health

Pay attention - limited upside

The 3 months correlation between Hisense and Evolent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hisense Home Appliances and Evolent Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolent Health and Hisense Home is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hisense Home Appliances are associated (or correlated) with Evolent Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolent Health has no effect on the direction of Hisense Home i.e., Hisense Home and Evolent Health go up and down completely randomly.

Pair Corralation between Hisense Home and Evolent Health

Assuming the 90 days horizon Hisense Home Appliances is expected to generate 1.16 times more return on investment than Evolent Health. However, Hisense Home is 1.16 times more volatile than Evolent Health. It trades about 0.1 of its potential returns per unit of risk. Evolent Health is currently generating about -0.04 per unit of risk. If you would invest  63.00  in Hisense Home Appliances on October 24, 2024 and sell it today you would earn a total of  269.00  from holding Hisense Home Appliances or generate 426.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hisense Home Appliances  vs.  Evolent Health

Hisense Home Appliances

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hisense Home Appliances are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hisense Home reported solid returns over the last few months and may actually be approaching a breakup point.

Evolent Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolent Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hisense Home and Evolent Health

The main advantage of trading using opposite Hisense Home and Evolent Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisense Home position performs unexpectedly, Evolent Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Evolent Health will offset losses from the drop in Evolent Health's long position.

The idea behind Hisense Home Appliances and Evolent Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..